Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, March 21, 2007

Campos on Foreign Private Issuer Deregistration

Excerpts from Remarks at the March 21 Open Meeting: Foreign Private Issuer Deregistration
by Commissioner Roel C. Campos:

In practical terms, I understand that nearly 60% of European issuers listed in the U.S will be eligible to deregister under the new rules. Now, I don't believe that there will be a rush to the exits. I am sure that foreign issuers realize that there are many benefits to being in the U.S. Our markets have the lowest cost of capital in the world. Cross-listings in the U.S. produce a premium averaging 30 percentage points over the price of stock in the home country. Further, the U.S. is, to use a military term, "target rich." In other words, nowhere else in the world are there more potential merger partners. Almost all U.S. companies are available for sale — at the right price. Of course, having securities already registered in the U.S. provides great flexibility in making acquisitions.

While this rule is important, in and of itself, I think it is also very significant in the larger context of today's global economy. And it shows that the U.S. is willing to make accommodations to reflect this new reality. On the one hand, the rule will make it easier for foreign private issuers to delist and deregister if they believe that the U.S. market does not present an attractive opportunity. On the other hand, we have also adopted rules and committed ourselves to making the U.S. regulatory environment more compelling for foreign companies. For example, we are in the midst of right-sizing and reducing the burdens of Section 404 of the Sarbanes-Oxley Act. And, as we emphasized just a few weeks ago, we're also committed to the roadmap designed to end the GAAP-IFRS reconciliation requirement.

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